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20 May 2015
The recent agreement1 between the Australian Government and the federal opposition on the Renewable Energy Target (RET) is good news for renewable energy. It provides a boost for the solar and wind industries, which now have the added certainty they need to build a substantial amount of wind and solar over the next five years.
The good news is the agreement preserves the same overall legislated target of generating about 45 terawatt hours (TWh) from renewable sources by 2020 under the scheme. This is estimated to represent around 25 percent of total electricity generation in 2020.
The major change is in the composition of the target. The Large-scale Renewable Energy Target (LRET) which supports wind farms and large solar projects will be capped at 33 TWh (down from 41 TWh) . The Small-scale Renewable Energy Scheme (SRES) which supports small-scale solar PV systems is expected to contribute at least 12 TWh by 2020 although the uncapped nature of the SRES means that this figure may end up being higher, particularly as new solar products emerge.
This is positive news on two fronts: it reinforces diversity in our sources of renewable energy - one of the scheme's original objectives. And it acknowledges the huge success of solar, where the combination of the falling costs and generous feed in tariffs have helped drive the popularity of it in Australia to a point where we have among the highest rate of residential solar take-up in the world.
Origin supports the RET and the development of renewable energy. We have about 285,000 green energy customers2 - more than any other energy retailer, and we have been investing in renewable sources of energy, including wind, solar and geothermal for more than a decade.
What will this mean for the energy industry?
The RET agreement will prompt substantial investment in wind and solar. Australia has many good quality wind projects, such as our own Stockyard Hill Wind Farm, which has already received planning approval.
We estimate that a 33 TWh LRET will require about 5,000 MW of wind farms to be built by 2020, or at least 12 large projects like Stockyard Hill. This is a lot to build in a relatively short period of time. To put this in context, Australia-wide we currently have about 4,000 MW of wind farms in operation, and this has been built gradually over the past 15 years. The wind industry has expressed confidence that it can meet this challenge. But it will also face strong competition from the solar industry. Large scale solar farms are increasingly economic and may provide a viable alternative to wind farms.
Solar has a significant role to play in helping us to reduce carbon emissions from our electricity supply, and this market and the technology continues to evolve at a rapid pace.
Around 360,000 of our customers have solar systems, and we’ve directly installed more than 80,000 of those systems. New solar products are evolving which open up the technology to a larger market, and commercial-scale solar is becoming increasingly attractive for businesses. The first wave of battery storage is also coming, which could add flexibility to the way small solar systems are used in the household and increase its appeal to a new range of customers.
Renewable energy will play a central role in how we power the future, and Australia’s new RET agreement supports the development of renewables in the short term. We don't yet know exactly which renewable technologies will evolve the fastest and prove the most efficient and economic over the long term. But we do know the future looks bright for renewable energy in Australia.